Creative Techniques For Financing Real Estate

Investing in real estate is one of the most effective ways accumulate wealth quickly when you do not have a lot of capital to invest up front. This all depends on your creativity however. Traditional real estate investing by definition involves the purchase, ownership, management, rental and/or sale of real estate for profit. Under this definition, real estate is an asset form with limited liquidity relative to other investments, and traditionally is highly dependent on cash flow, but when we look at creative ways of investing in real estate a lot more opportunities are open to us.


What are some ways to finance real esate creatively? There are many but here are some of the most popular to list a few:


Partnerships are fairly common because this is first thing a lot of real estate investors think about doing when they start out. They want to find somebody who can put up the money and split the deal with them fifty-fifty. This is an option but there are better ways to make a lot more.


Hard Money Lenders are individuals or companies that have cash ready for you to borrow. This is usually a much better alternative than traditional banks since it is a good source for getting funds quickly even if you have a low credit score. Many hard money lenders don’t like to lend more than 65% of the fair market value of a real estate property, so the better the deal, the more options you’ll have.


Private Lenders can be an even better alternative to hard money lenders because you can often arrange better terms since you are dealing with someone privately. Anyone, even friends or family can be a private lender. Everybody wins because you are offering them a much better rate of return than they will get in their savings or mutual funds and it’s secured by real estate.


“Subject to” Financing comes from the clause “subject to existing financing”. With this strategy you are leaving the existing financing in place and just taking over the payments on the sellers existing mortgage. Your name is no where on the loan. The sellers name will remain on the note. There are many other ways as well to do similar seller financing. This is an excellent strategy for those who have poor credit to begin investing quickly.


Wholesaling or Flippingare specific real estate investing strategies that are essentially creative solutions to eliminate the need for obtaining any funds at all. This is where you tie up a property at a discount (using an agreement) and then flip the property to another buyer or real estate investor for a quick profit. This is virtually risk free with no need for excessive cash, credit or financing and no need to do repairs or work yourself. This is why when it comes to making quick cash in real estate, this method of flipping houses is one the best routes to take not only for avoiding many of the financing headaches, it allows you to make cash more quickly for today's real estate market. It is smart to study as many options as you can and them compare the terms of each of them. Doing this will help you determine what works best based on your individual circumstances.